Need Help Deciding Order to Pay Off Debt...

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rwockenf
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Need Help Deciding Order to Pay Off Debt...

Postby rwockenf » Thu Oct 15, 2015 8:49 am

Some background: 3 Student Loans and 1 CCard

Loan Type, Amount, Interest Rate
Private Loan - $40,000 - 5.04% Variable
Fed Loan 1 - $13,000 - 5.125% Fixed
Fed Loan 2 - $2,500 - 5.00% Fixed
Credit Card - $3,500 - 0% until August 2016, then 22%

A caveat on Fed Loan 2 and question: I had a few missed payments on this loan back in Q4 2014 / Q1 2015, so my credit report is showing these 90 and 120 day missed payments and it obviously looks bad (the original payments were set up quarterly, but when I got serious about my financial situation earlier this year I had them changed to monthly and have been on time ever since.) My question is, would it look better to pay the loan off quicker to get it over with or stretch it out to get more "good" history on it before it closes out?

Every article I read discusses different methods of repayment dependent on Interest Rate, but mine are all essentially the same. After budgeting hardcore, I have determined that I have approximately $1600-$1800 per month that I can put towards my $59k debt, but I am trying to determine where the money should go towards. Part of me wants to Snowball Method it and get FL2 out of the way but the above question I asked gives me pause. Part of me wants to pay more towards the bigger loan. Maybe because the interest rates aren't much different it doesn't make a difference. I don't know. Any recommendations would be appreciated...Thank you much in advance.


Vermonster
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Re: Need Help Deciding Order to Pay Off Debt...

Postby Vermonster » Thu Oct 15, 2015 9:19 am

That 40k Variable scares me more than the Fed loans.

Unfortunately those lates are not going to be improved by anything but time. They'll stop having an effect on your score after 5 years regardless of when your last payment on the loan is.

Does your budgeting already include the minimums for all this?
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rwockenf
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Re: Need Help Deciding Order to Pay Off Debt...

Postby rwockenf » Thu Oct 15, 2015 9:25 am

Yes it does. Everything would be kept current while I am pouring additional funds into whatever debt goes first.

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Vattené
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Re: Need Help Deciding Order to Pay Off Debt...

Postby Vattené » Thu Oct 15, 2015 10:58 am

Are you currently using the credit card? I'd want to make sure there's no balance on it when the 22% APR kicks in, but that shouldn't be difficult.

I would definitely agree on tackling the private loan first, primarily because the rate is variable. It's also the biggest amount and, just personally, I would find it psychologically most satisfying to tackle the biggest first. It will take a while, but once the first is paid off it will be a great feeling and keep you motivated on aggressively getting the others. That's more personal preference, though.
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rwockenf
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Re: Need Help Deciding Order to Pay Off Debt...

Postby rwockenf » Thu Oct 15, 2015 11:15 am

No, I am not using the ccard. I got it for the BT benefits, so although I have been paying on it here and there, no new purchases have gone on it.



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